This would seem to confirm the widely held assumption that the reason that Microsoft’s console cost $500, compared to PlayStation 4 at $400, was the inclusion of Kinect, which can read the movement of players’ bodies, identify them by their faces and accept voice commands. At $100 cheaper, PlayStation 4 is outselling Xbox One significantly: The most recent numbers indicate that Sony has sold 7 million PS4s while Microsoft has shipped 5 million Xbox One consoles to retailers but won’t say how many of those were actually purchased.

Today’s move is another in a series of massive climbdowns for Microsoft. It was also its only conceivable play.

Microsoft has spent the better part of the last year insisting that Kinect was an integral, necessary part of the Xbox One experience. “Kinect is still an essential and integrated part of the Xbox One platform,” a spokesperson said in August. “By having it as a consistent part of every Xbox One, game and entertainment creators can build experiences that assume the availability of voice, gesture and natural sensing, leading to unrivaled ease of use, premium experiences and interactivity for consumers. We also strongly believe that once you try the all-new Kinect and the game and entertainment experiences it enhances or enables, you won’t want to use your Xbox One without it.”

What strong beliefs does Microsoft have left, at this point? It also strongly believed that consumers would want to install their game discs onto Xbox One’s hard drive at the expense of being able to sell or lend those discs later. It believed they’d be okay with their whole console turning into a brick if it wasn’t constantly connected to the Internet. That went out the window as soon as Sony announced it would preserve the status quo and do neither.

Matching Sony on price and features is clearly the driving force behind today’s announcements. Microsoft also said that it would move entertainment apps like Netflix and Twitch outside of the Xbox Live Gold paywall. Until now, only users paying $60 per year for Microsoft’s premium Xbox online service could access Netflix, while practically every other hardware device imaginable allows you to use apps like it for no extra charge. One of those devices being PlayStation 4. When Xbox 360 was on top of the world Microsoft could get away with it. Not anymore.

If anything, Microsoft should count itself lucky that Sony put online multiplayer gameplay behind its own PlayStation Plus paywall for PS4, meaning that at least Microsoft doesn’t have to worry about competing with that.

Ripping Off the Band-Aid

Make no mistake; removing Kinect is not easy. Microsoft is correct that there was an inherent advantage to letting game developers “assume the availability” of Kinect’s functionality in all user cases. And the news seems to have come as a not entirely pleasant surprise to at least some developers. “While removing Kinect is the right decision, I’m bummed at the work it makes for those who counted on the Kinect as always being there,” wrote Mike Mika of Other Ocean, which is currently creating an Xbox One game called #IDARB.

John Drake of Harmonix, which is currently creating the Kinect-only game Fantasia, was more succinct: “Oh, great. Super great,” he wrote immediately following the announcement.

But as with having to back away from its initial conception of an all-digital, always-online Xbox One, Microsoft realized all too well that it was time to rip off the Band-Aid all at once, as soon as possible. It knows it doesn’t run the show anymore. Like Sega did to Nintendo Sony has launched an all-out assault on it’s rival’s Achilles’ heel. Microsoft exclusive Titanfall is an excellent game that sold well — but PlayStation 4 still outsold Xbox One during its launch month.

Price is the problem, as others have learned recently. Getting Xbox One’s price in line with PlayStation 4’s was paramount, and matching Sony in terms of online video streaming features was as well since that is also an extra cost associated with Xbox ownership. Microsoft having to suck it up again and roll back a feature to get the price down illustrates that this was really its only feasible move. (Getting rid of an unpopular peripheral has got to hurt a lot less than Sony having to ditch backward compatibility to get PlayStation 3’s price to a palatable level.)

I wouldn’t count Microsoft out just yet, as it seems to understand that it must make serious changes to succeed.

The timing is also important. Rather than announce this at E3, Microsoft has primed the pump: As would-be Xbox One owners begin to hear the news that the console will be $100 cheaper very soon, they will begin to consider actually buying one. This will lead them to pay closer attention to Xbox’s announcements at the E3 Expo, to be held in early June just as the $400 Xbox One is going on sale, to learn about what they might expect to play on their potential new console.

If Microsoft can follow this announcement up with news of must-have software, it may begin to turn this around.